Bitcoin Price Falls

Bitcoin Is Crashing Again

Bitcoin is going down. It is in a bear market.

That is bad news if you are a short-term holder and good news if you are a long-term acquirer.

I reiterate, all you need to know is which way bitcoin (BTC) is going in the long term to develop a very profitable strategy. Get the direction wrong and you will lose. If you don’t “know” the direction, you are ill advised to play.

I believe the direction is up and significantly up, but for now in the short term it is down.

Now to get a view of how things can pan out it’s best to remove as much noise as possible. The easy way to do this is to use moving averages. The trouble is everyone is doing that, which tends to weaken the usefulness of that tool. Anyway, here is BTC with a 200 moving day average, which is the long-term indicator many watch.

Classically, the current breakdown would be considered bearish. I’m not a fan of moving averages because they change with the current price as it changes, so that leaves a misleading trail. They also tell you after the event that things are bearish. Now the moving average says the market is moving up on average and only gives a sell hugely below the high. In volatile markets this is a chronic problem.

So what I sometimes do is “doctor” the chart manually to de-noise it. The recent sharp rise and fall is pure noise:

Something hit the price then an event (the president of China spoke on blockchain) poked it up. These events are outside of “the trend” so let’s imagine they didn’t happen. Like a soviet political artist, let’s airbrush these inconvenient events from history.

You get this:

Now that’s a pretty clear picture. Bitcoin is tanking towards a capitulation. That bottom looks to be quite near in terms of time but the bottom is hard to call. Here are some ideas…

Continue reading at FORBES.com

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